The weakening of sterling against the euro during the past 12 months is responsible for a 21p/kg shift in comparative EU/UK pig prices, according to AHDB Pork.
In early trading on Friday last week, the pound was trading close to £1 = €1.11, a five-year low, while 12 months before, £1 was worth around €1.35. That’s good news, currently, for UK pig producers in that it’s making the price of imported pork more expensive in the UK.
“To illustrate this,” said AHDB Pork, “the current EU average reference price of €167 per 100kg is equivalent to around 144p/kg, slightly above the UK price. However, at the pre-referendum exchange rate, it would equate to less than 131p/kg, below the UK level. At last year’s exchange rate it would be lower still, around 123p/kg.
“Although the EU price is not the only factor influencing UK pig prices, it is an important one and this shows how much difference the exchange rate may have made.”
The value of sterling is influenced by many factors, of course, including economic data, policy updates and perceptions of economic and political stability. However, the EU referendum result has been the biggest single influence this year.
“Low growth forecasts and low interest rates,” added AHDB Pork, “coupled with the uncertainty around Brexit, means the value of sterling is not expected to rise significantly in the short term.”
